Reinvestment for Whom?
Reinvestment for Whom?
The Limits of Bank-Led Reinvestment
This chapter follows activists during the late 1970s and early 1980s, when the Home Mortgage Disclosure Act and the Community Reinvestment Act entered the federal regulatory state. Activists scored an important victory as the Federal Home Loan Bank Board embraced and spread a reinvestment program called Neighborhood Housing Services, a three-way partnership among municipal government, local banks, and community organizations that was created by Pittsburgh activists. But at the same time, two other developments suggested that the Board’s version of “urban reinvestment” ultimately deviated from what activists envisioned. First, regulators diagnosed the problem of reinvestment through non-discrimination framework that had emerged from the open housing movement; they focused on discrimination against individual borrowers. In contrast, activists had long argued that redlining should be understood as race-based geographic discrimination—a problem for entire neighborhoods when bankers assumed that non-white residents made communities “risky.” Here, activists and regulators talked past each other. Second, a new Board-led urban initiative called the Community Investment Fund revealed that regulators saw new urban lending as a potential boon to savings and loans. But the Board worsened gentrification by encouraging savings and loans to court more affluent back-to-the-city borrowers.
Keywords: Federal Home Loan Bank Board, Community Investment Fund, gentrification
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